Telecom pays $31.6 million in compensation in settlement of sub-loop extension discrimination claim

The Commerce Commission has reached a $31.6 million settlement with Telecom over alleged discrimination under the Telecom Separation Undertakings.

The settlement follows a decision by the Commission in May to issue legal proceedings alleging that Telecom had discriminated against other telecommunications companies in breach of the Undertakings by failing to provide them with unbundled bitstream access (UBA) in conjunction with the sub-loop extension service (SLES) when Telecom was providing an equivalent service to its own retail business.

The UBA/SLES service was intended to allow other telecommunications companies to provide their own voice services from their exchange based equipment in conjunction with a Telecom broadband service from a roadside cabinet. The Commission considered that Telecom’s failure to provide this service to other telecommunications companies, while providing it to its own retail business, caused serious harm to competition in telecommunications markets, reduced the extent of local loop unbundling, and resulted in significant commercial gain to Telecom.

While Telecom does not accept that its conduct was in breach of the Undertakings, it acknowledges that it failed to meet expectations that it would provide a UBA service with SLES in a timely manner, and has agreed to pay compensation to its wholesale competitors who have been adversely affected.

“The $31.6 million settlement means that Telecom has returned its commercial gain through the compensation it has agreed to pay to telecommunications companies Vodafone, Orcon, CallPlus, Compass and Airnet. This will enable these companies to invest further in local loop unbundling and provide competitive services to consumers. We are pleased that Telecom has worked constructively with the Commission to reach a settlement which has avoided lengthy and expensive litigation, and resolved the matter prior to structural separation coming into effect,” said Dr Patterson, Telecommunications Commissioner.

“In addition, Telecom is now in the process of rolling out its new Access Seeker Voice service which is intended to provide telecommunications companies with the equivalent functionality as the UBA with SLES service.” said Dr Patterson.